K. Rajkumar and M.V. Vasalan v Kannur Municipal Corporation and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR** ## **FRIDAY, THE 13TH DAY OF MARCH 2020 / 23RD PHALGUNA, 1941** ## **WP(C).No.8383 OF 2019(W)** ## **PETITIONERS:** **1 K.RAJKUMAR AGED 61 YEARS SON OF KUMARAN, SEENAS, THAZHE CHOVA P.O, KANNUR-670 018 2 M.V. VASALAN AGED 58 YEARS SON OF KUNJURAMAN, EDDOKKETHE VALAPPIL HOUSE, TEMPLE ROAD, P.O. CHERUKUNNU, KANNUR-670 018** **BY ADVS. SRI.P.B.SAHASRANAMAN SRI.T.S.HARIKUMAR** ## **RESPONDENTS:** **1 KANNUR MUNICIPAL CORPORATION REPRESENTED BY ITS SECRETARY, MUNICIPAL CORPORATION BUILDING, KANNUR -670 002. 2 THE MUNICIPAL COUNCIL, KANNUR MUNICIPAL CORPORATION REPRESENTED BY ITS CHAIRPERSON, CORPORATION BUILDING, KANNUR-670 002 3 K.K. BUILDERS CIVIL ENGINEERS AND CONTRACTORS, PARTNERSHIP FIRM, REPRESENTED BY ITS MANAGING PARTNER, K.K. MOHANDAS, KANNUR-670 001** **R1 BY ADV. SRI.K.K.CHANDRAN PILLAI (SR.) R1 BY ADV. SMT.S.AMBILY R1 BY ADV. SMT.NAMITHA NAMBIAR R1 BY ADV. SRI.SAJI THOMAS R1-2 BY ADV. SMT.M.MEENA JOHN R3 BY ADV. SRI.CIBI THOMAS BY GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P(C).No.8383 of 2019 2 ## **JUDGMENT** The petitioners are stated to be owners of stage carriages, having permits as contemplated under the Motor Vehicles Act, 1988. In the Writ Petition, they are aggrieved by Ext.P1 minutes of the meeting of various stakeholders, including the 1[st] respondent Municipal Corporation, whereby a decision was taken to increase the rate of parking fees at the Municipality Bus Stand, from the erstwhile rate of Rs.37.50 to Rs.45/,- in respect of stage carriage vehicles that use the Bus Stand as a halting place. The petitioners allege that the respondent Municipality had decided to construct a shopping complex in a portion of the land belonging to them, and adjoining the erstwhile bus stand, for the purposes of attracting more persons to utilise the bus stand, and the increase in parking fee was essentially to cater to the demand of the concessionaire, who is entrusted with the task of collecting the fees fixed by the respondent Corporation. It is pointed out that a build-operatetransfer (BOT) agreement was entered into between the 1[st] respondent Municipality and the 3[rd] respondent concessionaire, for constructing a bus terminal complex, including a luxury hotel, a budget hotel and a dormitory therein, together with various other facilities, and the terms of W.P(C).No.8383 of 2019 3 the said agreement required the 3[rd] respondent concessionaire to collect the fees fixed by the Corporation for use of the bus stand for a period of 29 years and three months, at the end of which period the constructions put up by the concessionaire would stand transferred to the 1[st] respondent Municipality. The petitioners contend that by virtue of the power vested in the Municipality under Section 472 of the Municipalities Act, the Municipality cannot fix a fee, which is more than the expense required by them for making available a halting place for the stage carriage operators and, going by the said yardstick, the amount of Rs.45/- fixed in Ext.P1 decision is grossly exorbitant. It is contended that a fee has necessarily to be in the nature of a quid pro quo for services rendered and, inasmuch as the fee in the instant case is disproportionate to the services rendered by the 1[st] respondent Municipality, the enhanced fee fixed in Ext.P1 ought to be quashed. 2. A counter affidavit has been filed by the 1[st] and 2[nd] respondent Municipality as also by the 3[rd] respondent concessionaire. In the counter affidavit filed on behalf of the Municipality, it is stated that the Municipality had decided to construct, operate and maintain a central bus terminal complex at Thavakkara, Kannur district through a concessionaire on BOT basis. After identifying the 3[rd] respondent as the concessionaire, an agreement was entered into with the said W.P(C).No.8383 of 2019 4 respondents and under the agreement the 3[rd] respondent is to build the bus terminal complex and operate it for 29 years and three months subject to the terms and conditions contained in the agreement, and on the expiry of the said period, the 3[rd] respondent is obliged to handover the possession and control of the terminal complex to the 1[st] respondent Municipality, which has since become a Corporation. It is stated that the bus terminal complex was established over an area of 6.35 acres of property that was acquired by the Municipality, after paying huge amounts by way of compensation to affected land holders, and it is thereafter that all modern facilities have been incorporated in the complex that is now constructed through the 3[rd] respondent concessionaire. Inasmuch as huge amounts have been spent on the terminal complex, and enhanced facilities are now available to the travelling public, it was decided to enhance the fees collected from stage carriage vehicles that use the terminal for halting in connection with their services. The fee fixed, in the opinion of the 1[st] respondent Municipal Corporation, is not disproportionate to the expenses incurred by them in making available the facilities offered in the complex. 3. In the counter filed on behalf of the 3[rd] respondent concessionaire, the stand taken by the 1[st] respondent Municipality is sought to be justified and details are given of the expenses incurred in W.P(C).No.8383 of 2019 5 connection with the construction put up by them pursuant to the agreement entered into with the 1[st] respondent Municipal Corporation. 4. I have heard the learned counsel appearing for the petitioners, the learned counsel for the 1[st] respondent Municipality, the learned counsel for the 3[rd] respondent concessionaire and also the learned Government Pleader appearing for the official respondents of the State. 5. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I find that the issue to be considered in the instant case is whether the enhancement of parking fee from Rs.37.50 to Rs.45/- can be seen as grossly disproportionate to the expenses incurred by the 1[st] respondent Municipal Corporation. It is trite that while the Municipal Corporation can levy a fee for services rendered, the said fee cannot be grossly disproportionate to the expenses incurred for rendering the services for otherwise the levy would be seen as a tax which the Municipal Corporation does not have the authority to levy. The distinction between tax and fee has been brought out in a plethora of decisions of the Supreme Court (See: **Agriculture Market Committee, Rajam and Another v. Rajam Jute & Oil Millers Association, Rajam [(2003) 4 Supreme Court Cases 187]** and **Nagar Panchayat, Kurwai and Another v. Mahesh** W.P(C).No.8383 of 2019 6 **Kumar Singhal and Others [2013 KHC 4699]** ) and broadly stated the distinction lies in the fact that a tax is a compulsory exaction of money by a State from its subjects whereas a fee is always in the nature of quid pro quo for services rendered by the service provider. Although the broad distinction has been largely obliterated over the years, the distinction is still relevant to test the validity of the levy. Under our Constitution, the power to tax has to be expressly conferred on a legislature whereas the power to levy a fee can be seen as incidental to a field of legislation that comes within the power of a legislature to enact. In the instant case, it is not in dispute that the Municipal Corporation does not have a power to tax the activities in question. The question then arises as to whether the quantum of fee realised by the Municipal Corporation would, on account of it being disproportionate make it effectively a tax, that it has no power to levy. In this context, one has to bear in mind that the Municipal Corporation can levy regulatory fees as quid pro quo for services rendered, and such quid pro quo need only have a broad co-relation with the expenses incurred by the Municipal Corporation for rendering the services. In other words the corelation between the fee levied and the expenses incurred for providing the services need not be of mathematical exactitude, and it is only if the fee levied is grossly disproportionate to the expenses incurred by the W.P(C).No.8383 of 2019 7 authority for rendering the services that the levy ceases to be a fee and assumes the nature of a tax. In the instant case, there is no material produced by the petitioner to suggest that the fee levied is disproportionate to the expenses incurred by the Municipal Corporation for providing the services in question. The petitioner has therefore not discharged his onus of establishing that the fee is disproportionate in nature. I therefore see no reason to interfere with Ext.P1 decision that is impugned in this writ petition. The Writ Petition in its challenge against Ext.P1 decision fails, and is accordingly dismissed. Sd/- **A.K.JAYASANKARAN NAMBIAR JUDGE** mns W.P(C).No.8383 of 2019 8 ## **APPENDIX OF WP(C) 8383/2019** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE PHOTOSTAT COPY OF THE MINUTES OF THE MEETING OF THE 2ND RESPONDENT DATED 13.02.2019 GIVEN BY LETTER DATED 01.03.2019** **EXHIBIT P2 TRUE PHOTOSTAT COPY OF THE JUDGMENT OF THIS HON.BLE COURT IN W.P.(C) NO. 30862 OF 2009, DATED 12.12.2017** **EXHIBIT P3 TRUE PHOTOSTAT COPY OF THE LETTER SENT BY THE 3RD RESPONDENT TO THE 2ND RESPONDENT, DATED 15.12.2018** **EXHIBIT P4 TRUE PHOTOSTAT COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT TO THE PRESIDENT, BUS OPERATORS ASSOCIATION, DATED 04.02.2019** **EXHIBIT P5 TRUE PHOTOSTAT COPY OF THE LETTER GIVEN BY THE CANNANORE DISTRICT BUS OPERATORS ASSOCIATION TO THE 3RD RESPONDENT, DATED 06.01.2019** **RESPONDENTS EXHIBITS:** **EXT.R3(A): TRUE COPY OF THE RELEVANT PAGES OF THE AGREEMENT ENTERED INTO BETWEEN THE 1ST RESPONDENT AND THIS RESPONDENT DATED 27.10.2004** **EXT.R3(B):TRUE COPY OF THE G.O(MS) 1904/2004 LSGD DATED 9.5.2004**